To achieve sustainable profitability. Innovent achieved profitability ahead of schedule in FY24, realizing full-year non-IFRS net profit of RMB332mn and non-IFRS EBITDA profit of RMB412mn. We think the better-than- expected profitability was mainly due to 1) strong product revenue growth and 2) one-off license fee income, especially the RMB690mn income from the transaction with IASO Bio. Total revenue reached RMB9.42bn (+52% YoY), including RMB8.23bn in product sales (+44% YoY). Sintilimab’s sales grew by 34% YoY to US$526mn, according to Eli Lilly. Looking ahead to FY25, mgmt projects continued non-IFRS EBITDA profitability, even excluding the US$80mn upfront payment from the DLL3 ADC out-licensing deal with Roche. Non-IFRS GPM expanded to 84.9% in FY24 from 82.8% in FY23, while the SG&A expense ratio decreased to 50.9% in FY24 from 58.0% in FY23, demonstrating improved operational efficiency. As of end 2024, Innovent held a robust cash balance of RMB10.2bn to support its long-term development.
　　Next-generation IO plus ADC, advancing toward global leadership in oncology. We see significant synergies between the Company’s next- generation IO (IBI363) and its expanding ADC portfolio (Claudin18.2ADC, DLL3 ADC, bispecific ADCs, dual-payload ADCs and APCs). Innovent already has over 10 ADC clinical programs, with combination trials with IBI363 being a key focus moving forward. We think IBI363 (PD-1/IL-2) has the potential to become a blockbuster next-generation IO therapy, targeting IO-treated and cold tumors. Data updates are anticipated at ASCO meeting in Jun, including PFS results from the 3mg/kg dose in IO-resistant sq- NSCLC. Innovent expects to initiate a Ph3 trial in this treatment setting this year. A Ph2 pivotal trial is underway comparing IBI363 to Keytruda in first- line IO-nave melanoma. Furthermore, Innovent plans to initiate a Ph3 trial of IBI363 plus bevacizumab in third-line MSS CRC in 2025.
　　Emerging blockbuster pipeline in CVM and beyond. Key CVM pipelines include IBI3016 (AGT siRNA), IBI3032 (GLP-1 small molecule), IBI3012 (GIP/GLP-1/GCG), and IBI3030 (PCSK9-GLP-1/GCG/GIP). IBI-3012 demonstrates superior efficacy over Amgen’s AM133 in preclinical models, with enhanced weight loss, better glycemic control, improved insulin sensitivity, reduced weight rebound, and a longer half-life due to optimized antibody engineering. In oncology, IBI3001 (EGFR/B7H3 ADC) has global FIC potential, while IBI3020 (CEACAM5 dual-payload ADC) is expected to file IND in 1H25. In autoimmune diseases, Ph1 readouts are expected in 2025 for IBI356 (OX40L) and IBI3002 (IL-4Rα/TSLP). Innovent targets five assets to enter Ph3 MRCTs by 2030, laying the foundation for globalization.
　　Maintain BUY. Driven by the anticipated near-term approval of mazdutide, continued profitability, and strong momentum across its innovative pipeline, we revise up our earnings forecasts and lift our DCF-based TP from HK$57.67 to HK$61.71 (WACC: 9.3%, terminal growth rate: 3.0%).